Stocks plunged and the dollar surged as global markets recoiled to President Donald Trump’s vow to strike Iran “extremely hard” within two to three weeks, dashing hopes for a near-term resolution to the Middle East conflict. Investors, already on edge after last week’s abrupt U.S. withdrawal from the Iran nuclear deal, reacted sharply to Trump’s bellicose rhetoric, which signaled a potential escalation of tensions. The president’s comments, delivered during a White House briefing, framed the U.S. position as uncompromising, with sanctions and military options remaining on the table.

Market volatility spiked as traders recalibrated portfolios amid fears of disrupted oil supplies and broader geopolitical instability. Crude prices jumped 2% on Monday as concerns mounted over potential blockades in the Strait of Hormuz, a critical chokepoint for global energy shipments. Analysts noted that the dollar’s rally reflected a “flight to safety” amid uncertainty, though corporate earnings reports later in the week may temper short-term swings.

Regional stakeholders face heightened risks, with Gulf nations bracing for possible U.S. military drills or retaliatory Iranian actions. Diplomatic channels have stalled, and intelligence reports suggest Iran is bolstering its missile defenses. Analysts warn that prolonged U.S.-Iran hostilities could derail fragile ceasefire talks in Syria and destabilize energy markets further.

The immediate outlook remains grim, with no clear path to de-escalation. Trump’s administration has ruled out negotiations until Iran halts support for proxy groups, while Tehran insists its nuclear program is non-negotiable. Experts caution that the current trajectory risks deeper economic fallout, including prolonged oil price shocks and reduced foreign direct investment in volatile regions.